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Another rate hike won't fix postal problems
Jan 2, 2014 - Newsday
Federal regulators approved Tuesday a two-year temporary price increase for first-class stamps. The charge will go to 49 cents per stamp on Jan. 26 to help the Postal Service recover from losses it says were brought on by the recent recession. But the increase will almost certainly be neither temporary nor a real path to recovery.
The rate was set to go up a penny to 47 cents this coming year anyway, because the Postal Service doesn't need permission for increases that match inflation. Over the two years the "temporary" rate is in place, inflation will likely make the whole increase permanent. And it won't be a real path to recovery because the amount of first-class mail sent in the U.S. peaked in 2001. That was around the time we were getting used to the Internet as a way to communicate, pay bills, join "mailing lists," and other things that require less mailing. Since 2001, first-class mail has declined more than 30 percent.
The Postal Service, theoretically self-supporting, went $16 billion into the red last year alone. Its troubles are not unique. Earlier this month, the Canadian postal service announced it would end door-to-door delivery in urban areas, slash jobs, and increase postal rates by almost a third. That's shocking, but it's also refreshing that the Canadian government is willing to let Canada Post change to survive.
In this country, Congress won't let Saturday delivery end, though it would save $2 billion per year. It won't let the Postal Service stop spending $5.5 billion annually to pre-fund retiree medical benefits, although it's the only federal agency required to do so. And members fight the closing of post offices and changes in the business model that could allow it to break even. The changes Canada Post is making are extreme, but they have an advantage over the tiny and "temporary" steps we're taking to shore up the Postal Service here: They might actually work.